Under an Order issued on February 12, 2021, certain broker-dealers will have more time to file their annual reports with the Securities and Exchange Commission (SEC). In Release No. 34-91128, the SEC detailed the rules and requirements of the extension.
Normally due within 60 calendar days after the end of the broker-dealer’s fiscal year, all financial reports, compliance and exemption reports, and annual reports prepared by an independent public accountant can now be due within 90 days for certain smaller broker-dealers.
To be eligible for this 30-day extension, the broker-dealer must:
- be in compliance with Exchange Act Rule 15c3-1 as of the date of its most recent fiscal year-end;
- have had total capital and allowable subordinated liabilities of less than $50 million, as reported in box 3530 of Part II or IIA of its FOCUS Report, as of the date of its most recent fiscal year-end; and
- be eligible to file an exemption report as part of its most recent fiscal year-end annual reports
What to do next
An eligible broker-dealer that wants to utilize the extension should submit written notification to its designated examining authority of its intent to rely on this Order for as long as it meets the above conditions. Annual reports must be filed electronically to qualify for the extension.
Reason for this change
FINRA requested this relief because of the unique challenges smaller broker-dealers face, including the short amount of time between the FOCUS report due date and the annual report deadline; the lack of interim audit work performed on smaller broker-dealers; the manual processes many smaller broker-dealers use to prepare supporting documentation; and the limited pool of PCAOB-registered auditors who assist multiple small broker-dealers with annual reporting.
To learn more about qualifying for this extension and complying with the terms of the Order, please contact Gregory Zoraian, Financial Services Practice Leader at gzoraian@grassiadvisors.com.
